The present invention relates to electronic commerce in general, and, more particularly, to a data processing system that provides an efficient market for: (1) the provision of loans and lines of credit between lenders and those seeking loans or lines of credit, or the provision of insurance by insurers to insureds (the “primary,” “retail” or “insurance” market), and (2) the buying and/or selling of existing loans or lines of credit among buyers and sellers, or the reinsurance of primary insurers by reinsurers (the “secondary,” “wholesale” or “reinsurance” market).
As anyone who has ever sought a loan, line of credit, or insurance policy knows (hereinafter an “applicant”), it can be a challenge to find a lender or insurer who is willing to offer a loan, line of credit, or insurance policy at a reasonable interest rate or insurance premium and on reasonable terms. Although the verity of this statement is clear for loan applicants with poor credit histories and little collateral or insurance applicants who present poor risk, it is also true for those with excellent credit histories and substantial assets, and who present a good risk. For example, although many lenders/insurers might endeavor to provide some types of loans, lines of credit, or insurance, few lenders/insurers provide more than a small subset of all of the types of loans, lines of credit, or insurance offered by all of the lenders/insurers. One lender/insurer might offer only 30-year adjustable-rate home mortgage loans for under $300,000 or homeowner's insurance for single-family dwellings while another only offers 15-year fixed-rate home mortgage loans for over $70,000 or flood insurance for apartment dwellers. Therefore, even a creditworthy credit applicant or good risk insurance applicant might waste his or her time approaching lenders/insurers who do not offer the type of loan, line of credit or insurance product that he or she desires.
Furthermore, even if a creditworthy loan applicant or good risk insurance applicant finds a lender/insurer who does offer the type of loan, line of credit or insurance policy that he or she desires, the applicant is unlikely to know if that lender/insurer is offering the product at a competitive rate and on competitive terms. In general, there are three ways that an applicant can remedy this.
First, the applicant can contact (e.g., in person, on the telephone, etc.) numerous lenders/insurers and inquire into their interest rates or insurance premiums and terms for a particular loan, line of credit or insurance policy. In fact, many people do precisely this when seeking a home mortgage loan or automobile insurance because minor differences in interest rates and terms are well-known to result in substantial differences in monthly payments, and the premiums, terms, fees and underwriting standards of different insurers vary widely. Although it clearly pays to shop around, even the most stalwart are unlikely to contact more than a dozen lenders/insurers because of the time and effort involved.
Second, the applicant can consult newspapers and other periodicals that publish interest rates or insurance premiums and terms for a variety of lenders/insurers. Such listings are, however, unlikely to be comprehensive and are likely to be out-of-date, particularly in times when interest rates, insurance premium rates, or other contract terms are changing rapidly. One factor that accelerates the perishability of interest rates or insurance premiums in newspapers and periodicals concerns lenders/insurers who discover that their published interest rates or insurance premiums and terms are not competitive. Typically, those lenders/insurers immediately change their interest rates or insurance premiums and terms, but because of the latency in publishing and disseminating newspapers and periodicals those changes are not immediately known. Although an applicant can consult published resources that do not have a printing latency (e.g., the Internet sites of lenders or mortgage brokers, etc.), those rates are often misleading because they apply only to those borrowers who are most creditworthy or insureds or offer the best risk.
Third, the applicant can contact an “independent” loan broker or insurance agent who represents a plurality of lenders/insurers. The independent loan broker or insurance agent is not, however, obligated or motivated to provide the applicant with the least expensive loan, line of credit or insurance policy at the best terms, but rather the loan, line of credit or insurance policy that garners the loan broker or insurance agent the largest commission for the least cost. In other words, because the loan broker or insurance agent does not have a fiduciary duty to the applicant, and, therefore is not legally (or financially) motivated to find the applicant the least expensive loan or line of credit at the best terms, the applicant might be disadvantaged by using a loan broker or insurance agent rather than using a lender directly.
Regardless, when an applicant has satisfied himself or herself that he or she has found a lender/insurer who offers the desired loan, line of credit or insurance policy at a competitive interest rate or insurance premium and at reasonable terms, the applicant must thereafter expend an indeterminate amount of time and energy to learn if he or she qualifies for a desired loan, line of credit, or insurance policy from that lender/insurer. And although an applicant might satisfy himself or herself that he or she has located a lender/insurer with the best interest rate or insurance premium and terms, that does not mean that he or she has, in fact, done so. There could be other lenders/insurers, unknown to the applicant, who offer better interest rates or insurance premiums and terms, and who would accept the applicant.
Furthermore, the lender/insurer might decide that the applicant does not qualify for the desired loan, line of credit, or insurance policy, or that the applicant, because of credit problems, little collateral, poor health, accidents in the past or other high risk factors, does not qualify for the best interest rates or insurance premiums and terms, which are what brought the applicant to that lender/insurer in the first place. In either case, the applicant might have wasted his or her time in approaching the lender/insurer or might not receive the interest rate or insurance premium and terms that were anticipated.
The end result is that, in today's marketplace, it can be difficult for those seeking a loan, line of credit, or insurance policy to find a lender/insurer that is willing to offer the loan, line of credit or insurance policy that the applicant desires at a competitive interest rate or insurance premium and on competitive terms.
Perhaps surprisingly, it is even more difficult for each lender/insurer to find a satisfactory number of potential customers (i.e., applicants who are interested in and qualify for the particular lender's/insurer's loans and lines of credit or insurance products). In fact, some lenders/insurers spend millions of dollars per year on advertising to entice applicants to their door only to learn that many do not qualify for any type of loan, line of credit or insurance policy under the lender/insurer's lending or insurance underwriting standards. This is extremely inefficient and problematic for lenders/insurers because the money spent on advertising, 800-numbers, application takers and underwriting reviewers must be recouped from the earnings of those financial products that are, in fact, provided to applicants who do qualify and ultimately close a loan, line of credit or insurance policy In other words, a portion of the money (e.g., application fees, points, interest, insurance premiums, etc.) paid by those applicants who do close loans, lines of credit or insurance policies goes to pay for the lender/insurer's costs in advertising and culling out unacceptable applicants. Therefore, a lender/insurer could offer creditworthy or good-risk applicants lower fees, interest rates or premiums if the lender/insurer could forego advertising and had numerous applicants knocking on its door, all of whom were creditworthy or acceptable risks.
In summary, not only do applicants have difficulty locating a lender/insurer that offers the type of loan, line of credit or insurance product sought at competitive rates and on competitive terms, but it is also difficult for lenders/insurers to find large numbers of applicants who are interested in, and qualify for, the lender's offerings, and that are acceptable risks, without having to spend time and money on advertising and culling out the unqualified.
Therefore, the need exists for a mechanism that enables an applicant to quickly and easily find a lender/insurer that offers the loan, line of credit or insurance policy that he or she desires at competitive interest or premium rate and on competitive terms and that also provides lenders/insurers with large numbers of qualified applicants at a reasonable cost.